The world’s two largest reinsurance companies, Swiss Re and Munich Re, have practically doubled their estimates of potential losses and have lowered their earnings forecasts as a result of the terrorist attacks in the U.S.
Munich Re had estimated losses at around €1 billion ($920 million); it now sees the pretax impact at around €2.1 billion ($1.93 billion). Swiss Re raised its estimates of the after-tax effect on earnings from around $750 million to over $1.25 billion. Both companies said that previous forecasts of earnings increases would have to be revised, but that they still expected to at least equal last year’s figures.
They stressed the difficulties the reinsurance industry faces in making accurate forecasts concerning the eventual impact of the tragedy in the U.S. Substantial claims for additional property damage, liability concerns and losses from business interruption cannot yet be estimated with any real accuracy.
Munich Re indicated that the unprecedented nature of the losses would require a total rethinking of the reinsurance process. Most analysts have concluded that the overall effect of the losses and the weakness in the capital markets will reduce reinsurance capacity and further boost premiums.
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